Cuomo to present state budget with no tax hike

New York Gov. Andrew Cuomo proposed a mostly flat $132 billion budget on Tuesday that has no tax increases, more education and health care aid, and a radical change in pensions for new public employees.

Cuomo said his second annual budget that he will present to lawmakers includes about a 2 percent increase in state spending that’s tied to Medicaid growth, although total spending, including federal funds linked to state spending, will be mostly flat. The budget also would force school districts to implement changes such as tougher evaluations for teachers and principals — based partly on student performance — by withholding from aid from those that fail to do so.

“The Legislature sees whatever a governor proposes as a floor, so the main task will be to try to restrain the Legislature’s effort increase school aid,” said E.J. McMahon of the fiscally conservative Manhattan Institute.

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Cuomo was scheduled to comment Tuesday afternoon in his budget address.

Higher education funding is mostly held flat, after three years of deep cuts, but Cuomo would include a second annual increase of $300 in yearly tuition for students in the State University of New York and City University of New York systems.

The budget is built around spending about $2 billion from the “millionaire tax” increase on New York’s top earners adopted in December. That pays for a $200 to $400 income tax break for most middle-class families, addresses a $2 billion deficit, and helps pay for 4 percent increases for public schools and hospitals and health care facilities through the Medicaid health care system. Those increases total $1.4 billion.

Cuomo is trying to balance continued hard fiscal times in a sluggish recovery with plans to invest in New York’s future and attract jobs through tax breaks and other enticements. He also wants to cut long-term spending, including what he’s called unsustainable public pension costs.

Cuomo’s proposed pension changes would save governments outside New York City $83 billion over 30 years, while saving New York City $30 billion. The new less lucrative pension would be applied to new hires, not current employees or retirees.

“The pension reform proposal is significantly stronger than last year’s,” said McMahon of the fiscally conservative Manhattan Institute. “Gov. Cuomo has a continuing capacity to be innovative and creative.”

“I think there are some young people who would like the idea,” said Robert Ward of the Rockefeller Institute of Government, another think tank that analyzes state government. “It changes the overall concept of how you look at public employment, which in some ways makes it a less attractive option, but for certain fields like technology it might be very attractive.

“A lot of young people are not looking to stay in one job for 30 years,” Ward said, noting the marked departure from most employees’ view of state government as long, reliable employment.

The budget now goes to the Legislature, which traditionally increases spending slightly.